Minority business owners sometimes find securing funding from traditional financial institutions challenging, mostly due to a limited credit history. Because of this, online lenders may be the best option when it comes to small business loans for minorities.
Reviewed by: Sarah Brooks, Personal Finance Writer and Editor
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Nearly 20% of employer businesses are owned by minorities, yet gaining access to additional funding can often be a confusing process to work through.
Minority entrepreneurs may ask themselves the following questions: Which financial institutions should they work with? What are the lending criteria in order to be approved for the funding that they seek? Are the lending institutions that they are reaching out to going to offer a positive experience? And finally, what are the best small business loans currently available for minority-owned businesses?
Top Picks for The Best Small Business Loans For Minorities
Uncapped - Best for No Minimum Credit Score Requirement
As an owner, you'll want to choose financial products and organizations that meet your current unique needs. Luckily, we’ve done the work for you and have found the best small business loans for minorities available today.
In this review, we highlight the rates, fees and terms of each lender and explain what makes them a good option. We also share potential downsides of each lender, and provide a rating methodology you can use to select the best option for your needs.
Best Online Business Loans for Minorities
Working with online lenders that offer unsecured business loans may offer more accessibility than with traditional banking partners. Online lenders may have unique loan products that serve very specific customer segments. Below are the top online business loans for minorities.
Monthly fee: 3-9% for 6 month loans, 6-18% for 12-month loans, 9-27% for 18-month loans
Loan amounts ranging from $2,000 to $250,000
No prepayment penalties and no origination fees
Convenient application process
Pros & Cons
American Express Business BlueprintTM program hosts the American Express® Business Line of Credit product. The lender offers e-commerce loans to small businesses in addition to other cash flow management tools. You can apply for a American Express Business Line of Credit in a timely manner. Business lines of credit provide borrowers with a set limit of funds to draw against when needed.
Business lines of credit from American Express range from $2,000 to $250,000 and each draw is repaid in 6-, 12-, or 18-month installments. Six-month loan fees are 3-9%, 12-month loan fees are 6-18%, and 18-month fees are 9-27%. To qualify, you need a minimum credit score of 640, have been in business for at least one year, and have at least $3,000 in average monthly revenue.
However, all businesses are unique and are subject to approval and review.
Industry best factor rate for MCA - as low as 1.10
APR for the Line of credit product starts at 35%
Flexible repayment terms up to 16 months
Get funding in as little as 24 hours
Check your rate with a soft credit pull
Pros & Cons
Tailored funding solutions to fit your needs
Fast decision and funding times
No collateral required
Large loan amounts
Flexible payment options
Not all industries qualify
Must be in business at least one year
Rates are not disclosed prior to application
Backd was founded in 2018 with a mission to provide more access to funding to small businesses, including those owned by minorities. Since their inception, they’ve funded more than $1 billion to over 10,000 small businesses. They also understand that no two businesses are alike, and they’ve tailored their loans to fit your unique small business’ needs.
Main Features Backd offers working capital loans and business lines of credit. Working capital loans range from $10,000 to $2 million with terms up to 16 months. Payments are flexible and are made daily, weekly, or semi-monthly depending on your business needs. Business lines of credit range from $10,000 to $750,000 with unlimited terms. To qualify, you need to be in business for at least one year and have $100,000 or more in annual revenue.
Backd wants to help your small business succeed and get you the funding you need to thrive. Their online application takes just a few minutes to fill out and will not affect your credit score. If approved, you’ll receive the funds within 24-48 hours.
Bluevine specializes in small business lines of credit as opposed to small business loans. A line of credit operates similarly to a credit card - you get approved up to a certain amount, draw on the funds you need, pay them back, and can use them again. Lines of credit are ideal for businesses who may need extra funding available for a longer period of time.
Main Features Bluevine offers lines of credit from $5,000 to $250,000, with terms of six or 12 months from each draw. Rates start at 4.8%, and Bluevine does not charge any origination or prepayment fees. To qualify, you’ll need a minimum credit score of 625, a business history of at least six months, and $10,000 or more in monthly revenue.
Minority entrepreneurs in need of a straightforward loan product that they can use again and again should consider a line of credit from Bluevine. Low rates, excellent customer service, and fast funding times make this lender an attractive option.
Simple application: You can apply for an equipment loan online from your home, office, or anywhere with internet connection.
Positive reviews: National Funding has a great reputation on reputable sites like Better Business Bureau (BBB) and TrustPilot.
No down payment required: You don’t need to put any money down to take out a National Funding equipment loan.
Origination fee: National Funding will charge you an origination fee of 1% to 2%, which can increase your overall cost of borrowing.
High annual revenue is required: National Funding only lends to minority businesses who earn at least $250,000 per year so it can be difficult to qualify if you’re a newer venture.
Industry restrictions: If your minority business is related to an industry such as cannabis, adult entertainment, or guns, National Funding won’t be able to lend to you because of certain regulations.
National Funding offers equipment loans to help your minority business buy new or used equipment that will allow you to operate successfully. You can get approved for up to $150,000, without a down payment and repay what you borrow every month.
Main Features National Funding’s equipment loans cap out at $150,000 with repayment terms between two and five year years. The pay rate starts at 1.10 and you’ll repay your loan on a monthly basis. To be considered for an equipment loan, you’ll need a credit score of at least 600, at least two years of business history, and $250,000 or more in annual revenue.
If your minority business earns at least $250,000 per year in revenue and you’re looking for a way to cover the cost of equipment, a National Funding equipment loan is worth exploring. You can prequalify online without any impact to your credit and won’t need to put any money down.
Biz2Credit is best for smaller-sized minority businesses who may need additional working capital to help keep their business afloat. Biz2Credit currently offers three different loan products - working capital loans, term loans, and commercial real estate (CRE) loans - all of which have high limits for borrowers. Minority business owners may also be impressed with the 72-hour turnaround time from application to funding.
Main Features Working capital loans are used to fund day-to-day operating expenses, including purchasing inventory, paying employees, paying for marketing expenses, and more. A working capital loan from Biz2Credit ranges from $25,000 to $2 million, with varying terms and repayment periods. To qualify for a working capital loan with Biz2Credit, you’ll need a minimum credit score of 575, a minimum annual revenue of $250,000, and to have been in business for at least six months.
Biz2Credit offers high borrowing limits and fast funding times. If you’ve been in business for at least six months and have a high annual revenue, Biz2Credit is a lender worth considering.
Uncapped - Best for Established Ecommerce Businesses
While Uncapped doesn’t specialize specifically in serving minority business owners, the lender offers transparent and flexible products that may be a good supplement to government-backed loans. However, Uncapped only lends to businesses with an online model, such as ecommerce, subscription, SaaS, or a mobile app.
Main Features Uncapped will lend between $10,000 and $10 million to businesses with at least six months of history and $10,000 in monthly revenue. There’s no minimum credit score requirement, but your business will need to follow an online model and process more than 40% of its transactions online. Other than a finance fee ranging from 2-12% of the loan amount, there are no additional costs or prepayment penalties. You can select a fixed-term loan with a three to 24 month term, or you can opt for the revenue-based model, which requires you to pay 5-25% of your monthly sales to Uncapped until the principal plus the fee is paid.
For established minority business owners with an online model that need a quick injection of cash, Uncapped is a great option. You can structure the loan to meet your needs and access some free resources, such as ACH payments, as well.
How We Choose the Best Business Loan for Minorities
We used the following criteria to choose the best lenders for minority entrepreneurs:
Loan Features:We looked at the types of loan products available, including loan amounts and term lengths.
Application process: The length of the application, documents required, and whether or not a hard or soft pull on your credit were all things we looked at when choosing lenders.
Interest rates and fees: All loans come with an interest rate, but some lenders have higher fees than others.
Qualification process: To qualify for any loan product, lenders will look at your credit score, monthly income, and length in business.
Customer support: Customer support is always a consideration no matter the loan type. We chose lenders who are easy to contact via phone, email, and live chat.
Online user reviews: We turned to trustworthy sites like Trustpilot to look at user reviews from past customers.
Perks and Bonuses: Occasionally, loan products may offer perks and bonuses, such as payment flexibility, advertising transparency, and advanced technology.
Features of The Best Business Loans for Minorities
Min. Credit Score
Min. Time in Business
Max. Loan Amount
American Express Business Line of Credit
Average monthly revenue: at least $3,000
Ranging from $2,000 to $250,000
Up to $2 million
Up to $10 million
Up to $2 million
Up to $250,000
U.S. Small Business Administration (SBA) Loans for Minorities
The SBA provides comprehensive and unique resources to help all small businesses succeed, and is focused on creating an ecosystem for the healthy development of minority-run businesses. Below are the following small business loans offered by the Small Business Administration:
SBA 7(a) - This program has the goal of funding small businesses up to a maximum of $350,000. A unique feature is the speed in processing and approval of applications. Learn more about SBA 7(a) loans
SBA Community Advantage Loans - Established in 2011, the SBA Community Advantage Loan program has the goal of increasing underserved communities’ access to credit. The maximum loan amount is $350,000.
SBA Microloan Program - Lending intermediaries work with smaller businesses needing funding. The maximum loan via this program is $50,000. Borrowers are able to use the funds as needed, except for paying off debts or making real estate purchases. Learn more about SBA Microloans
HubZone Contract Program - This program is focused on providing up to 3% of Federal Contracts to underserved communities.
It’s important to note that the SBA partners with lending organizations that work with minority-run businesses at the local level.
Nonprofit Loans and Other Lending Programs
Minority business owners aren’t limited to seeking funding from traditional financial institutions. There are numerous local, national, non-profit, and for-profit organizations that support unique communities. These partners may offer resources that traditional lenders cannot provide.
Union Bank’s Business Diversity Lending
Diversity Lending provides a variety of loan and banking products. Qualified customers can receive up to $2.5 million in funding. Union Bank also provides Minority Business Certification assistance through its certification center, a key component to proving a business is minority-owned.
Accion is focused on providing inclusive financial services and partnerships. Accion helps small businesses around the globe via equity investments, business advising, and partnerships.
Those looking for a crowdfunding platform to fund their business should explore Kiva. The organization provides comprehensive support for micro-entrepreneurs. Kiva has a global audience but also provides services for U.S.-based entrepreneurs. For individuals looking to donate and lend funds to entrepreneurs, Kiva borrowers have a 96% repayment rate.
Business Consortium Fund (BCF)
BCF is part of the National Minority Supplier Development Council. The fund has microloans available that range from $10,000-$75,000 for qualified businesses. Loaned money can only be used in ways that are predetermined by BCF.
Indian Loan Guarantee and Insurance Program (ILGP)
ILGP program is available to enrolled members of tribes in the United States. In addition to being an enrolled member of a tribe, the company seeking funds must be at least 51% minority-owned. The company must also be focused on elevating and uplifting Native American Communities through its services.
Community Development Financial Institution Loans (CDFI)
CDFI fund partners with financial institutions across the United States. Currently, there are a little over 1,000 member institutions. These organizations make lending decisions unique to the communities that each partner serves.
Immigrant and refugee entrepreneurs face an uphill battle in establishing credit. Accompany Capital helps these groups gain access to credit via microloans, lines of credit, and small business loans.
U.S. Department of Agriculture (USDA) Business and Industry Loan
USDA Business and Industry loan program partners with various financial institutions who then distribute loan funds to applicants who meet predetermined criteria. Applicants’ projects should be based in a rural location. The Business and Industry Loan is not specifically targeted toward minority business owners.
Business Grants and Additional Resources for Minorities
In addition to online small business loans and nonprofit loans, grants are also available to minority business owners. Grant programs are a wonderful way to find funding for specific areas of one’s business, and best of all, small business grants do not need to be paid back.
SBA 8(a) Business Development Program - For entrepreneurs looking to gain access to government contracts, the SBA 8 (a) program helps qualified businesses work for the Federal Government through Sole Source Contracts. This allows businesses to avoid going through the bidding process in order to be granted a Federal contract.
SCORE - SCORE connects entrepreneurs with mentors that provide business-focused support. SCORE mentors can be found across the U.S.
Small-business grants - Grant funding can be an attractive way to pay for specific components of a business. Small business grants can be found via the SBA, your local municipality, or your state.
Minority Business Development Agency (MBDA) - Starting a business is difficult. Dealing with expansion and the growth of a business is even more challenging. MBDA works with entrepreneurs during the expansion and growth seasons of their businesses.
First Nations Development Institute Grant - Grants issued by the First Nations Development Institute are specifically focused on the economic betterment of Native American communities. With that in mind, businesses that are focused on this initiative are the most likely to win grants issued by this agency.
National Minority Business Council -This non-profit organization helps to connect minority businesses with adjacent professional support. The National Minority Business Council also seeks to create a community ecosystem that provides business additional resources to its members.
Which States Have The Most Minority-Owned Small Businesses?
According to MaxFilings, states with the most minority-owned small businesses include:
California (1.6 million)
Texas (1.1 million)
New York (708,000)
States with the least minority-owned businesses are
North Dakota (3,100)
South Dakota (4,000)
The top five states with the highest percentage of minority-owned small businesses include
District of Columbia (41.1%)
New Mexico (39.3%)
Who Qualifies for Minority Small Business Loans?
Minority-owned businesses are businesses where 51% or more of the firm is controlled by minorities, women, or veterans. In addition to meeting the minority-owned ownership threshold required by various government agencies, there are other requirements the borrower must meet. Businesses may be required to show their yearly revenue as determined by the lender. A minimum credit score and other details determined by the potential lender must also be met.
How Do You Apply for Business Loans for Minorities?
When applying for a loan with an online lender, you’ll fill out a preliminary application that takes just a few minutes. From there, you’ll be contacted by a representative from the company and asked for more details about your business. This may include a business plan, tax returns, income statements, and your business tax ID. You should get a lending decision within a few days, and funds are usually dispersed within hours to days of loan approval.
For minority-owned businesses, there are numerous ways to access the resources needed to grow a business. For those looking for loans, professional support, or grant programs, it’s likely that there is a program that will fit your business needs.
There has been a growth of financial institutions aiming to meet the needs of historically underserved communities. Finding the right loan products as a minority business starts with research and ends with personal preference.
Frequently Asked Questions(FAQ)
What is a Minority-Owned Business?
In order to be designated a minority-owned business, a business must have a minimum of 51% ownership stake by a person or persons who are considered a member of a minority group. This would include African Americans, Asian Americans, Native Americans, and Hispanic Americans. Women and veterans are also often considered minority groups.
Why Do Minority Small-Business Owners Get Rejected for Loans?
Minority-owned businesses are much less likely to get approved for financing. And when they are approved, they receive lower amounts and higher interest rates. According to the Minority Business Development Agency, many minority business owners won’t even apply for a small business loan due to fear of being rejected. Common reasons for loan rejection include lower net worth, operating in a poor or rural area, and little to no credit history.
Technically, no. Minorities can apply for any business loan - whether that’s through a bank, credit union, or online lender. In order to be approved, it’s important you meet the minimum qualification requirements. So long as you meet those, you should be able to qualify for the loan whether you are a minority business owner or not.
Why Should You Look for Minority-Specific Loans?
Rather than looking for specific loans for minorities, it’s best to apply for lenders that you have a chance at qualifying with. This article, for example, allows you to quickly research lenders that may be willing to work with you. Oftentimes, minorities are looking for loans with less stringent credit qualifications and income requirements. Online small business lenders are often willing to work with those types of applicants, whether they’re a minority or not.